UK Stock Market Fundraising Value by Retail Companies Grows Ten Times in One Year – Company / Commercial Law
Reynolds Porter Chamberlain
UK: UK stock market fundraising value by retail firms increases tenfold in one year
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Fundraising Shifts From Repairing Balance Sheets To Funding M&A Opportunities
Secondary fundraising by listed UK retail companies last year peaked in a decade, with the value of London Stock Exchange placements and rights issues reaching Â£ 1.9bn sterling (end of year March 31), ten times more than the Â£ 186.7 million raised. the year before, says RPC, the City-based law firm.
RPC says online retailers, in particular, have used these additional fundraisers to take advantage of mergers and acquisitions opportunities created by the industry disruption linked to COVID -19.
Fashion retailer Boohoo has raised Â£ 197million to help fund struggling brand acquisitions and recently announced the Â£ 55million acquisition of Debenhams. ASOS, which raised Â£ 246.6million last year to strengthen its balance sheet, has now acquired the Topshop, Topman and Miss Selfridge brands from the Arcadia portfolio.
Ecommerce companies have also raised funds to capitalize on the organic growth opportunities created by the accelerated shift to online sales as part of the ‘foreclosure’ for example, Ocado raised Â£ 650million through a placement new actions to finance its expansion.
The share of retail sales made online reached 36% last year, up from 21.6% over the same period a year earlier, as many physical stores were forced to close during national and regional lockdowns .
Jeremy Drew Co-Head of Retail at RPC says the recent rally in sector stock prices suggests that retailers who made acquisitions during the worst of the COVID crisis may have made some very timely acquisitions. The FTSE-350 General Retailers Index has risen 56% over the past year (through April 16) and is now 18% above its pre-COVID level of January 1, 2020.
âSome retailers handled an unprecedented crisis very well. They used depressed valuations to make good strategic acquisitions. They raised funds to defend their balance sheets, which allowed their banks and suppliers to stay on the sidelines They have also used the crisis as a catalyst to raise additional cash to accelerate the growth of their online offerings. “
“The pandemic will create more opportunities for bidders of distressed retail assets. The recent acquisition of Jaeger by Marks & Spencer shows that new players are now present in this market.”
Market fundraising during the first half of COVID has been significant for some retailers who have been unable to operate normally due to the lockdown. The constant changes in restrictions during the pandemic mean that “non-essential” retailers have been forced to close without notice, leaving lower incomes and many with excess inventory.
RPC says this dramatic increase in fundraising shows some of the benefits of being listed in times of economic crisis.
Jeremy Drew adds: âDespite a turbulent year, investors cast a large vote of confidence in retail. The industry wants to invest to continue its transition and institutional investors have been willing to look beyond the pandemic and also provide it to the traditional high street. as e-commerce businesses. “
âAs we come to the end of this crisis, we expect fundraising to shift more towards mergers and acquisitions and invest more in warehouses (including automation), logistics and other capital expenditures. related to electronic commerce. “
RPC points out that while internet sales reached 36.4% of retail sales in January, they fell back to 32.8% in March, as consumers postponed their online purchases before physical stores reopened in April.
The value of secondary fundraising on the London Stock Exchange by retail firms peaks in a decade in 2020
** Office of National Statistics: November 30
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